PRODUCTIVE GOVERNMENT EXPENDITURES AND LONG-RUN GROWTH

The purpose of this paper Is to review some of the recent developments in endogenous growth models, Specifically, our focus is on the growth effects of productive government spending in dynamic general equilibr ium models. We use a simple overlapping generations model as our basic framework and illustrate the role of taxes and spending. We then exam ine several related issues: nonrivalry in publicly provided goods, exi stence and uniqueness of competitive equilibrium, endogenous public po licy, ways of financing public expenditures, composition of publicly p rovided goods and services, and private alternatives. Finally, we revi ew some empirical results related to output elasticity of public capit al and educational expenditures.